If an exchange is hacked and at that time your bitcoins are lent out, and are "stolen", does this have legal implications and possibly help you because the bitcoins were not in your possession? Would the account you were lending them to have the duty to return them? You had no access to them at the time of the hack. As you may know some exchanges have this lending feature.

Any thoughts on this? Would it be any "safer" for one to have the coins lent out, or create possible advantageous legal avenues to explore?

Provided the coins are not returned, you have a cause of action for negligence, conversion, arguably securities fraud, etc. - irrespective of whether the coins were lent out at the time or otherwise parked with the exchange

The hack itself gives you something to proceed on in the sense that there is a prospective opportunity cost of not having access to lend the coins, among varied other state and federal causes of action relating to data privacy/security and the like

If you are for something more than the abridged version, just pm me or email me directly. I am an attorney, btb.

All coins regardless of how they're being used or who they're being used by, are in the custody of the exchange. All you have is an IOU that should allow you to withdraw what the site is telling you what you have. The coins haven't actually gone anywhere different, just allocated to a different bit of their database.

But even if your coins were not lent out, I think the mere fact that you have coins in an exchange that got hacked is enough reason to seek legal action for a refund.

It actually depends on the law of land where the exchange is located or registered with government for doing business.Bitcoin is a decentralized and shall be treated differently in different countries depending on their laws